There are two main versions of Windows XP that home users use, one called OEM, the other Retail.
The OEM version can ONLY ever be used on one PC. If the "key" has already been used on one PC you cannot use it on another.
Even if the PC dies and cannot be used again you cannot put the OEM software on another PC.
The Retail version CAN be moved to another PC along as it is removed from the first PC. You cannot have it on more than one PC at a time.
There are other versions of Windows XP, for the large enterprise customer for example, where I think the license allows you to put it on hundreds or even thousands of machines, but I am not sure how Microsoft control that.
There are also developer versions of Windows XP, and trial versions, so all in all it is a bit of a minefield.
But as a general rule, you cannot use a disk already registered with Microsoft.